Health Care Reform Implementation Update – January 31, 2014

This week the Congressional Budget Office (CBO) provided new scores for the three sustainable growth rate (SGR) repeal proposals from the Senate Finance, House Ways and Means, and Energy and Commerce Committees; a list of potential offsets for SGR legislation circulated Washington; the president discussed the already positive developments from the Affordable Care Act (ACA) in his State of the Union address; Utah announced its intention to expand Medicaid under the ACA tipping the balance of Medicaid-expansion and non-expansion states to more than half expanding, and 20-term congressman and long-time advocate of a health care reform Henry Waxman, announced his retirement. Additionally senator and doctor, Tom Coburn, who has spent 15 years in Congress, will retire at the end of this year.

ON THE HILL

On January 24, the Congressional Budget Office (CBO) said that the House Ways and Means SGR repeal bill would cost $121 billion over 10 years. Additionally, CBO reduced its estimate for the House Energy and Commerce SGR bill from $175 billion down to $146 billion. Then on January 25, the CBO announced the score of the Senate Finance Committee’s SGR repeal bill of $150.4 over 10 years. The higher-cost Senate Finance proposal includes close to $40 billion in Medicare extenders not included in the other two proposals.

A list of possible offsets for SGR formula repeal is being circulated around Washington. The list is extensive and is derived from policies developed by the Obama administration, the Congressional Budget Office and the Bipartisan Policy Center. All listed potential offset policies are merely options, not cuts or policy changes that will necessarily occur. Cozen O’Connor Public Strategies is happy to provide this list upon request.

On January 28, the House Ways and Means Committee held a hearing on the law’s employer mandate and its definition of a “full-time” worker. The ACA counts employees who work 30 hours a week to be full-time employees, and thus part of the group to whom employers must provide health insurance. At the hearing, retail, restaurant and other business groups argued that the ACA’s definition of full-time work is going to cause businesses to cut employee hours to avoid having to offer them health insurance. Ways and Means Ranking Member Rep. Sandy Levin (D-Mich.) argued in the hearing, “Why wouldn’t you want to cover them? Why wouldn’t you want to cover these people?” Republicans argued that the requirement will simply force employers to alter hours and employment opportunities.

The House Oversight and Government Reform Committee held a hearing titled “A Roadmap for Hackers? Documents Detailing HealthCare.gov Security Vulnerabilities,” in which the committee continued to examine the security concerns presented by the ACA.

On January 27, senior Sens. Orrin Hatch (R-Utah), Tom Coburn (R-Okla.) and Richard Burr (R-N.C.) released a legislative outline for a replacement plan to the ACA. The plan envisions issuing tax credits to those not working at a large company, allowing states to set up high-risk pools and significantly reshaping our Medicaid program. The plan would be paid for by capping the tax exclusion for employee health plans. It still needs legislative language and an official cost estimate, but it is unlikely to move through the Democrat-controlled Senate.

On January 28, the House voted 227-188 to pass the No Taxpayer Funding of Abortion Act, which would ban federal subsidies from going toward insurance plans that cover abortion and making the ban on federal spending on abortion permanent – something which is approved on an annual basis through the Hyde Amendment. The White House threatened to veto this bill.

Speaking in Texas on January 23, Rep. Paul Ryan said Republicans are discussing eliminating the ACA’s “insurance company bailouts” in negotiations to lift the nation’s debt ceiling in February. Republicans have already introduced legislation to target the reinsurance fund and risk corridors to which Rep. Ryan alluded, which are designed to limit the risk insurers have to take and try to prevent premium spikes for consumers that result from ACA’s requirements that insurance companies accept all beneficiaries. Sen. Mike Lee also noted the “bailouts” in his official Tea Party response to the State of the Union address.

The Medicare Payment Advisory Commission (MedPAC), the independent body that advises Congress on issues affecting the Medicare program, is next scheduled to meet in March. We will provide further information on the agenda as it becomes available.

The Medicaid and CHIP Payment and Access Commission (MACPAC), the non-partisan federal agency charged with providing policy and data analysis to the Congress on Medicaid and CHIP, is next scheduled to meet on February 20 and 21. We will provide further information on the agenda as it becomes available.

Focused on initiatives like the faulty rollout of HealthCare.gov, Reps. Anna Eshoo (D-Calif.) and Gerry Connolly (D-Va.) are co-sponsoring a measure that calls for creating a U.S. Digital Government office, responsible for reviewing and guiding major IT projects of all federal agencies. The legislation would also make the role of U.S. chief technology officer a permanent position.

AT THE AGENCIES

The federal government is seeking a candidate to fill a new position as a CMS risk management officer. The position was inspired by the faulty rollout of HealthCare.gov.

According to an IRS notice released on January 23, Americans with limited health coverage under Medicaid and certain military health care programs will not be subject to the individual mandate penalty in 2014.

HHS awarded nine states with a combined $201.2 million in new federal grants to support state-run and partnership exchanges. In order of grant amount received, the states receiving grants are Washington state, New Mexico, Mississippi, Arkansas, Delaware, Nevada, New Hampshire, Rhode Island and Utah.

On January 22 at the U.S. Conference of Mayors, HHS Secretary Sebelius encouraged mayors to urge their state legislatures to expand Medicaid under the ACA. Also on January 22, an HHS release said that more than 6.3 million people were determined eligible for either Medicaid or the Children’s Health Insurance Program (CHIP) between October and December.

The Federal Trade Commission (FTC) sued Kobeni Inc. due to spam emails it sent threatening federal prosecution unless the reader immediately clicked on a link to enroll in health insurance. The FTC accuses Kobeni and its president Yair Shalev of injuring consumers and deceptive representations, as well as violations of the FTC Act and the CAN-SPAM Act, failing to provide notice of opt out and failing to include a valid physical address in the spam mail.

IN THE WHITE HOUSE

On January 28, President Obama delivered his fifth State of the Union address. While health care and the ACA did not play as central a role in the speech as they have in years past, the president did note the strides that had been taken for those with pre-exiting conditions, those who are 26 and still able to remain on their parents’ health insurance plans, and that over nine million Americans had signed up for private health insurance or Medicaid coverage.

On January 23, Chris Jennings, a senior White House healthcare adviser, announced he would be stepping down from his post. An unnamed source told the Washington Post that Jennings’ departure was due to health and family reasons.

IN THE STATES

On January 23, Utah Governor Gary Herbert expressed in a news conference that he backed his state’s expansion of Medicaid. Assuming the legislature is on board with Gov. Herbert, Utah would become the 26th state to agree to expand Medicaid, and a majority of states will be in this group.

IN THIRD PARTIES

On January 23, Moody’s downgraded the credit outlook for health insurance companies from “stable” to “negative.” Some of the concerns prompting Moody’s downgrade were a rocky rollout of the exchanges, lower than expected enrollment numbers, uncertainty over who is enrolling, ever-changing regulations, troublesome back-end exchange issues and an underlying question of whether insurers are going to get paid sufficient premiums through the exchanges.

New research from the American Action Forum shows that young adults, defined as between 18 and 35 years old, may find it financially advantageous to pay the individual mandate penalty instead of purchasing insurance coverage, as long as they remain healthy.

A study from the Brookings Institution from January 27 says that the ACA will improve the “well-being and incomes of Americans in the bottom fifth of the income distribution.” Brookings projects in its report that incomes in the bottom fifth of the distribution will increase close to 6 percent, and those in the bottom 10th of the distribution will increase over 7 percent.

Target is now planning to stop providing health insurance coverage for its part-time employees beginning in April, at which point these employees can join the ACA’s health insurance exchanges. Target’s announcement follows those of Trader Joes and Home Depot among others. Target’s shift reflects the ACA requirement that employers provide health insurance to their full-time employees.

IN THE COURTS

The U.S. Court of Appeals for the D.C. Circuit granted an expedited appeal of Judge Paul Friedman’s January 15 ruling. On January 15, Judge Friedman upheld the IRS rule to extend tax credits and cost-sharing subsidies for the purchase of qualifying health insurance plans in health insurance exchanges established by the federal government.

On January 24, the Supreme Court granted the Little Sisters of the Poor, a group of Catholic nuns, a temporary exemption from the birth control mandate of the ACA until the 10th U.S. Circuit Court of Appeals decides the case.

For many businesses, nothing seems more remote than the maneuvering of Beltway insiders. But what happens in Washington and in state and local government is critically important to your company and your industry. With government more involved in business than at any time since the 1930s, organizations that can negotiate the government labyrinth of politics, policy, and process will come out on top.

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